Analysts at JPMorgan Bank (JPMorgan) have stated that they are skeptical about the recent growth of the crypto market, and in their opinion, the upward trend of the market in recent days has been too long. They have noted that they will be cautious in the future as well; Because the crypto market may be affected by the "buy the rumor, sell the fact" phenomenon.
According to Deblock , JP Morgan analysts led by Nikolaos Panigirtzoglou have announced in their new report that 2 important factors contributed to the growth of the crypto market last month. However, they have emphasized that they are not sure about the validity of these two factors.
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Bitcoin spot ETFs likely to be approved
The crypto industry is still not fully regulated
Bitcoin halving effect
Bitcoin spot ETFs likely to be approved
The first is the possibility of spot bitcoin exchange-traded funds (ETFs) being approved in the US, which some traders believe could inject new capital into the crypto market. Activists of the digital currency market believe that such an event is a big win for the crypto industry and a big loss for the US Securities and Exchange Commission (SEC). They went on to emphasize that the SEC's approach will become more lenient in the future:
We think that after spot ETFs are approved, instead of new capital flowing into them, existing funds in bitcoin-based funds, including the Grayscale bitcoin trust fund, futures funds, and publicly traded mining companies, will flow into the new ETFs. will be.
In addition, the aforementioned analysts emphasized that spot bitcoin ETFs have already been launched in Canada and Europe; But they have attracted little capital. That's why they are skeptical about new capital flowing into spot bitcoin ETFs in the US.
The crypto industry is still not fully regulated
According to analysts at JP Morgan, the SEC's failure in cases involving Ripple and Grayscale companies has helped boost the crypto market. However, they noted that this does not guarantee that crypto market regulations will be eased in the future. These analysts continued:
Given that much of the crypto market is still illegal, it's not entirely clear whether the industry's rules and regulations will be significantly loosened in the future. Crypto laws and regulations in the US are still on hold. With the FTX scam still not forgotten, we can't be sure that US lawmakers will change their stance just because of these 2 victories.
Bitcoin halving effect
One of the reasons why many traders are optimistic about the future of the crypto market is the Bitcoin halving event in April or May 2024. In general, halving causes the price of Bitcoin to increase by reducing its new supply. However, according to JP Morgan analysts, this event has had an impact on the price of Bitcoin and may not lead to its price growth in the future. They emphasized:
This argument is not very convincing; Because Bitcoin halving and its impact are predictable and in our opinion, it is included in the price of Bitcoin. For example, examining the cost of producing Bitcoin after halving and hash rate and the difficulty of mining it, shows that the cost of producing BTC goes from $21,000 to about $43,000. The price of 35,000 dollars is also compatible with a 20% decrease in the hash rate of Bitcoin; Because miners who were in expensive locations or didn't have very efficient hardware, have left the market. This is reasonable in our opinion and shows that the halving event has had a great impact on the price of Bitcoin.
In general, JP Morgan analysts have stated that they will be wary of the crypto market in the future; Because they believe that the approval of the Bitcoin spot ETF may be affected by the "buy the rumor, sell the fact" phenomenon. In this phenomenon, the price of digital assets increases after the news about an event is published, but decreases after its implementation and with the increase of investors' sales.